Case Studies

Property Finance

Hotel and Office Build Out

A 300-room hotel and office accommodation in a major city location was 100% project cost funded by way of:
• Senior Debt
• Mezzanine
• Equity.

Residential Build Out Project

An experienced developer had a project to build out 48 houses over two phases of 24 houses.  This office arranged the following funding package:
• Senior debt of 95% loan to costs.
• A sales guarantee facility whereby the developer had to input only £100,000 but made a profit of £2 million!!

Stabilisation Fund

A developer built out a student accommodation project using senior debt finance.  On completion of the project, the senior debt provider required repayment.  However, because the client did not have sufficient time to achieve a relevant level of occupancy, the client could not arrange long term funding.  This office arranged a "stabilisation" facility for a term of 36 months which allowed the senior debt provider to be discharged.  The facility also allowed the client to achieve the requisite occupancy levels to allow his own bank to provide a long-term investment mortgage.  Such a facility is also appropriate for new build hotels and nursing homes.

Apartment Scheme Funding

1. A client intended to build out over 100 apartments in a desirable location.  Senior debt and mezzanine funded 85% of the project costs.  This office also pre-sold the apartments whereby the investors exchanged contracts and paid over a 10% deposit.  These deposit funds were used as part of the funding package.

2. A developer wished to build out apartments to then retain as a long-term investment.  This office arranged funding to cover 85% of the project costs along with a long-term mortgage to begin once the project was completed.  The long-term mortgage was 10 years, interest only, 65% loan to value at an interest rate below 4%.

Abortive Planning Costs Insurance

The costs associated with applying for planning permission can be substantial and deter a developer from progressing an opportunity.  If a developer submits a planning application, an insurance policy can be written whereby, should planning not be achieved, 90% of the costs incurred can be recovered.

Business Finance

Bridging Finance

1. A Client had bought a property at auction, exchanged contracts and paid over his 10% deposit.  After several extensions to the contract, the client had 7 days to complete.  His bank let him down with 3 working days to go before losing his deposit.  We arranged a facility that completed within 2 days!!

2. Client wanted to buy a commercial property and convert it into apartments.  He had no available funds.  This office arranged 100% funding by using the equity in his other properties as additional security.

3. Bridging finance to pay off a bank who offered up debt forgiveness.

4. A developer needed to discharge some preliminary fees before starting the project of knocking down his house to build out 12 apartments.  R&E Finance arranged a second charge bridge for £50,000 to provide the necessary funds

5. Bridging finance to pay off a Trustee in bankruptcy.

6. A client was able to buy an investment property from a Receiver for £1.7 million even though the break-up value was £2.7 million.  This office arranged a 12-month facility for the full £1.7 million.

7. Bridging finance to resolve family issues concerning a deceased's estate.

Development Finance

Planning Gain

Planning Gain

1. A developer required £300,000 to cover the costs of a planning permission application, for a residential development of a brownfield site. These monies were provided by an investor known to this office. Once planning permission was obtained, the uplift in the value of the land was realised by selling the land.  The subsequent profits were shared on a 50:50 basis between the developer and the investor.

2. A private equity house funded the majority of the costs to buy a Brownfield Site and obtain the planning permission to build out 245 affordable apartments.  Once the planning permission was obtained, the land was sold to a pension fund who forward funded  the build out of the apartments.

Forward Funding

1. A client obtained planning permission to build out 100 affordable houses and apartments.  With little capital to progress the project, this office introduced an institutional investor who:
• Bought the land
• Entered into a development agreement with the client
• Paid for the build out of the project
• Retained the residential units
• The developer earned 12% of project costs as a profit.

2. A client located an opportunity to build out over 300 apartments in a good city location.  An institutional investor bought the land and paid the client to build out the project.  The client earned 12% of project costs as a profit.

Miscellaneous Case Studies

Licensed Trade (incl. Hotels & Restaurants)

1. A restaurant owner with poor accounts needed Working Capital to support the business.  Funding arranged based upon credit card sales.

2. A client bought a public house and 100% funding was arranged based upon projected profits.

3. A hotel was refinanced to redeem expensive credit card debt.

4. A second charge loan was arranged for a hotelier to arrange further Working Capital.

Miscellaneous Case Studies

Commercial & Semi-Commercial

1. A married couple divorced.  The commercial property they owned jointly had to be sold as part of the settlement to release the wife from the bank mortgage.  The husband could not re-mortgage as he had bad credit.  The problem was, the husband operated his transport business from the commercial premises.  
We were able to arrange a 100% facility for the eldest son to buy the property from his parents at a purchase price equating to the outstanding mortgage

2. A property investor who rented out an Indian restaurant wanted to transfer ownership to her niece at a discounted purchase price equivalent to the outstanding mortgage.  We arranged such a facility.

3. A wealthy businessman wished to sell his recruitment company.  Unfortunately, within the company was a large residential property portfolio, which needed to be sold to allow the sale of the recruitment company to proceed.  The client was willing to sell to his property manager but wished to retain an interest in the capital growth of the portfolio.  He was also willing to input 25% of the purchase price to help the new owners.  
Our team structured a new company to purchase the portfolio whereby the vendor input 25% of the purchase price into shareholders’ funds for a 26% shareholding in the new company.  We were also able to arrange the commercial mortgage of 75% of the purchase price.

4. A hotel where the business is seasonal has a competitive business mortgage of circa £1 million at BBR+1.5%.  Unfortunately, the client also had an expensive overdraft and business development loan with the same bank costing £3,000 per month.  R&E Finance arranged a second charge facility to discharge the overdraft and business development loan and saved the clients £1,500 per month.

5. Two independent clients wished to buy public houses, unfortunately neither had any cash to put into the venture.  However, both clients had equity in other properties, which the lender used to leverage up against to fund 100% of the purchase price

6. A small engineering company required £50,000 to create new tooling for their forthcoming production.  As there was equity in the commercial property that the client owns, our office arranged a second charge loan to allow the client to progress.

7. A tenant bought at a discounted price the retail premises rented for 14 years.  100% of the discounted price was arranged.

Miscellaneous Case Studies

Valuable Items

• Jewellery
• Art
• Wines, etc.

Use such assets to borrow short term for any purpose.
Client had a cash-flow crisis and needed £70,000 quickly.  This was arranged, using the security of artwork valued at £150,000

Miscellaneous Case Studies

Unconventional Case Studies

1. R&E Finance worked with a client who wanted to remortgage a holiday cottage in Penzance, Cornwall. The client was employed as a contractor and able to supply accounts for the holiday let.
The property was valued at £625,000 and a Lender was able to lend £345,000 to redeem the outstanding balance of the existing mortgage and release equity to fund improvements. The client chose a product that enabled them to roll up the interest over the two-year term.

2. R&E Finance worked with a 61 year old self-employed director who had successfully developed two adjacent four-bedroom detached houses on a plot of land in Oxfordshire. Both properties were listed on the same title and both were tenanted. The total value of the houses was £1.73 million.
The client wanted to raise £1.07 million to clear the development loan, pay off existing debts and fund a new project. A lender was able to structure a solution to meet the client’s requirements, with a product that enabled him to roll up some of the interest and service the remainder.

3. R&E Finance worked with an experienced landlord, with a large portfolio of properties, who had recently completed the construction of new student accommodation near to the University of Liverpool. The client wanted to pay off the development finance and raise additional funds for his next development project.
The accommodation was a row of nine terraced houses, each split into a seven-bedroom HMO, providing lodging for 63 students in total. An added complication was that all the properties were held on the same title.
The total value of the properties was £3.3 million and the landlord wanted to borrow 80% LTV. R&E Finance was able to arrange a loan of £2.64 million with interest serviced, on a five-year term.

4. R&E Finance worked with a limited company application, with three individual applicants, looking to purchase a desirable maisonette in Fulham for £400,000. The clients wanted to borrow £295,000 to buy the property but the rental value was only £1,495 per month and so the numbers did not stack up.
As the clients were experienced landlords, a lender was able to structure a solution by splitting the balance and enabling the clients to roll up interest of part of the loan and service the interest on the remainder. Because there were no monthly payments due on the roll up element of the loan, this portion was not subject to a stress test and so it meant that the serviced loan element, as it was now a smaller balance, met the required stress test.
As a result, the clients were able to invest in a sought-after property with robust potential for capital gains even though it delivered a low rental yield.

5. R&E Finance worked with a buy to let investor who was looking to purchase a property in need of a new kitchen, bathroom, and modernisation throughout.
The purchase price of the property was £200,000 and the investor intended to increase both the capital and rental value by carrying out the required work, with no requirement for the property to be tenanted.
With its Refurb to Let product, a lender was able to lend £124,000 (62% of the purchase price) to the borrower, on a 12-month term and then roll up all the interest on top. The minimum interest obligation on this product is three months and so, from the fourth month, the investor was free to re-mortgage or sell the property with complete flexibility

Miscellaneous Case Studies

Ex-Pat Case Study

1. R&E Finance worked with a 50 year old self-employed ex-pat living in Zimbabwe. The client wanted to raise funds on a buy to let property in England in order to purchase another property abroad. The unencumbered detached house in Kent was already tenanted and valued at £875,000. The client wanted to borrow £300,000 on a five-year term and wanted to service the interest.
The rental income was sufficient to cover the stress test for this loan balance and so a lender was able to mortgage the property, releasing the capital the client wanted to access.

Miscellaneous Case Studies

Foreign National Cas Study

1. R&E Finance worked with a Russian national based in Europe who wanted to remortgage an apartment in London. The property was vacant and being marketed for sale, with a valuation of £7 million. The client wanted to borrow £3.5 million and although he was a successful real estate developer, he had no credit record in the UK.
A lender was able to lend the required amount, on a two-year term, with interest serviced monthly. The Early Repayment Charge on the product was only three months and so, if the client was able to sell the property in this time, he would be able to redeem the loan from the fourth month with no charge.